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HMRC internal manual

Corporate Intangibles Research and Development Manual

Core computational rules: deductible debits: relief for capitalised expenditure on an intangible asset: grants received


Where a company nets off a grant, subsidy or similar sum receivable against the accounting cost of an intangible asset, no adjustment to the sums written off that asset in the accounts will normally be necessary as a result. But the general exemption from corporation tax of certain grants made in Northern Ireland out of UK public funds is preserved under Part 8 (see CA14200).

Where an exempt grant is netted off in this way the sums written off that asset in the accounts should be increased for the purposes of Part 8 by the amount by which the grant has caused the sum written off to be reduced.


For example, assume an asset costing £1000, purchased with the aid of an exempt grant of £100, is written off on a straight-line basis in a company’s accounts over 10 years. Its initial cost for accounting purposes is £900 (£1000 - £100) and the annual amortisation charge in the accounts is £90.

This reflects the recognition of the grant of £100 over the same period, effectively at a rate of £10 per annum. In computing the deductible debit, therefore, the sum written off the asset each year in the accounts (£90) should be increased by £10 to £100.

Grants taken to profit and loss account

See CIRD13030 for the treatment of grants taken to the profit and loss account, and so recognised as accounting gains, as they arise.